Voters will weigh fate of tax change today at the ballot box

Michigan voters today will determine if a detested tax on business property is eliminated and a new fund is created to make local governments whole.

Proposal 1 on the primary election ballot is a referendum on the already approved phaseout of Michigan’s personal property tax on business equipment.

The measure involves a new use of existing tax revenue.

It does not include a tax increase.

Here’s how Proposal 1 works, step by step:

1. Part of the state’s existing 6 percent use tax goes to local governments based on annual lost personal property tax revenue.

2. An unpaid, five-member authority oversees distribution of use-tax revenue to local units. It could not increase taxes.

3. Manufacturers are assessed a tax to replace lost use-tax revenue to state coffers based on the value of their business equipment. The tax is estimated to be about 20 percent of the personal property tax.

4. Schools receive a fund distribution in addition to 2 percent of the use tax guaranteed in the state constitution.

All of the above hinge on whether voters approve Proposal 1 at the polls today.

Separate from the proposal, additional general fund revenue would be raised through the elimination of business tax incentives.

The personal property tax helps fund local essential services, such as police and fire protection.

The state’s use tax is levied against mobile home sales, off-road vehicle and watercraft sales, telephone services and hotel room rentals, among other items.

Dedicating a portion of the use tax to local governments eliminates the Legislature’s allocation process, creating a secure stream of revenue to local units, supporters argue.

The phaseout of the business property tax is set to begin this year with an exemption to businesses with less than $80,000 in cash value.